Comparing No Closing Cost FHA Loans

FHA home loans may offer no cost options like covered closing fees or no lenders fees, and comparing these mortgages to see which may be the most suitable option for a home buyer is important to finding the best fitting loan for a person's individual situation. FHA home loans will often offer these incentives, but they will sometimes come with the price of higher interest rates or other fees.

Closing costs, paired with a down payment, can be a financial burden for some looking to purchase a home, and these costs will often provide something of an inconvenience to the home buying process. Some FHA home loan lenders will offer to cover the closing costs associated with home buying, leaving the borrower to only pay the down payment, but this will typically come with somewhat higher interest rates over the course of the loan. For example, a person can take the offer of having their closing costs covered, but with an interest rate of 4.5%, where if they opt out of having their closing costs covered their interest rate will only be 3.25%. This option is best for those who may have difficulty obtaining the closing costs plus down payment amount to close on the sale of their home, and wish to buy the home at a faster rate.

No cost FHA loans may be the perfect option for some home buyers, as they allow a person to close on their home faster and with less money down. However, these benefits will often come at the cost of higher interest rates to be paid over time, which in turn could cause the home buyer to pay more. For a prospective home buyer that is looking to close on their home quickly, these no cost options may be an ideal fit for their situation, as they would prefer to pay the amount of the closing costs or lenders fees over time through interest rates rather than up-front. However, if the closing costs or lenders fees are not a financial burden on the home buyer, choosing to pay them could prove to be more financially beneficial.